How lower interest rates affect you as a buyer?
- Megan Soo
- Sep 22
- 2 min read
When interest rates drop, the first reaction many buyers have is: “Should I wait for rates to fall further before committing?” On the surface, it seems logical — after all, lower interest rates mean cheaper loans. But let’s break down what really happens.
What Lower Interest Rates Mean for You
1. Bigger loan amount – With mid-term interest rates moving under 4% (as calculated under TDSR^), your maximum loan eligibility increases.
2. Lower monthly mortgage installments – Cheaper financing means smaller monthly commitments.
3. More disposable income – With reduced repayments, you’ll have more money left over for other needs or investments.
Sounds perfect, right? But here’s the catch.
What Happens If You Wait
While waiting for rates to fall, other factors could work against you:
1. Loan tenure shrinks – The maximum tenure is capped at 30 years for loans at 75% Loan-to-Value (LTV). The longer you wait, the older you get — and this shortens your available loan tenure, which reduces affordability.
2. Loan amount gets smaller – A shorter tenure means the bank will offer you a smaller loan, even if rates are slightly lower.
3. Bigger downpayment required – Since you can borrow less, your cash/CPF outlay has to increase.
Why Time is of the Essence
In property buying, timing matters more than chasing interest rate movements. A good property today can grow in value far beyond the small savings from waiting for rates to drop. While lower interest rates make financing more attractive, delaying could mean losing the unit you want — or paying more when prices rise.
💡 Bottom line: Don’t wait for the “perfect” interest rate. Focus on the right property, at the right price, and lock it in while you can.
In real estate, time in the market beats timing the market.
Source:
^ If you want to know and understand abit more about TDSR, the below article by DBS is a good read:
Comments